Tue, Jul 21, 2015 page14

• Apple Watch needs time

  • AFP, SAN FRANCISCO
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  Nearly three months after the launch of Apple Inc’s fashionably smart wrist wear, some analysts say the Apple Watch is not a mainstream mega-hit. However, others see promise in its popularity with Internet-savvy young people.

  Media outlets last week jumped on a study by research firm Slice Intelligence suggesting that, based on a large sampling of e-mail receipts in the US, orders for Apple Watch have plunged 90 percent since the week that the wearable computing gadget made its debut.

  The estimate did not factor in data about Apple Watch sales at real-world stores. It remains to be seen whether the famously tight-lipped technology company provides insights into Apple Watch sales when it releases a quarterly earnings report today.

  While not sounding an alarm, BMO Capital Markets analysts put out word to investors that they were “disappointed” and reduced their estimate for Apple Watch sales in the coming year.

  They reasoned that the product was “nice to have, but not a necessity, and is a bit hard to use.”

  Richard Windsor at Edison Investment Research said that even if Slice is way off the mark about the drop in Apple Watch orders, it was clear the smartwatch has sold far below even conservative expectations.

  “My single biggest disappointment when the Apple Watch launched was Apple’s failure to come up with a compelling use to which the device could be put,” Windsor said. “I think this failing is the single biggest reason why the device is underperforming and why wearables in general continue to massively underperform the hype.”

  However, Cantor Fitzgerald experts believe Apple Watch is likely to be a “go-to gift” during the year-end holiday season and become the best selling new product in Apple’s history.

  Apple Watch was the first new product line introduced by the culture-changing company behind iPhone, iPad, iPod and Macintosh computers since 2010.

  Global Equities Research managing director Trip Chowdhry estimated Apple could sell 20 million to 25 million Watches in the final three months of this year.

  Jack Gold, president of research firm J. Gold Associates, said that it would be no surprise if Apple Watch sales momentum fell after the hype of it hitting the market subsided.

  “The Apple lovers are going to buy things as soon as they come out,” Gold said. “The rest of the market though, the mass market, really waits for more definition around ‘What can this do for me?’”

  So far, no smartwatch, even a fashionably sophisticated offering by Apple, has hit the market accompanied by uses so compelling that people swarm to snap them up, according to Gold.

  “Why do I spend US$400 for a screen on my wrist that allows me to do basically the same thing than my phone does?” he asked rhetorically.

  This is not just a challenge facing Apple. Rather, it is a gauntlet thrown down before every maker of smartwatches or other forms of what has become known as “wearable computing,” according to Kantar Worldpanel ComTech analyst Carolina Milanesi.

  “It is a market issue for wearables,” Milanesi said. “It makes your life easier, it might help you with fitness, but it does not serve a basic need of communication, which is what the phone does.”

  While people in the US can get smartphones at steeply discounted prices if they sign telecommunication service contracts, such discounting is not done with smartwatches, Milanesi added.

  Given those factors, it is unrealistic to expect smartwatches or other wearables to rack up the kinds of sales seen by smartphones, she said.
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